The extent to which items in accounting reports can be combined or presented separately is covered by the concept of:
A) comparability.
B) faithful representation.
C) economic substance.
D) materiality.

Question

Quizplus · Accepted Answer

The concept of materiality in accounting refers to the significance of transactions, balances, and errors contained in the financial statements. It determines the threshold or cut-off point after which financial information becomes relevant to the decision-making needs of the users. Materiality affects how items are presented in financial reports, including whether they can be combined or need to be presented separately, based on their significance to the overall financial statements.

The Extent to Which Items in Accounting Reports Can Be